Shree, Home Buyer in Northern Barton Heig...

What does"as is", "short sale", "subject to 3rd party approval" mean?

Asked by Shree, Northern Barton Heights, Richmond, VA Fri Mar 7, 2008

I am looking to buy a home in the next 6 months and see these terms mentioned in the hmoes for sale ads. What do they mean and what is their implication for me - the buyer?

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Third party approval is the bank/mortgage company who owns the home usually in a foreclosure. Short sale is where the seller has made a deal with their bank/mortgage company for them to take less for the home while they sale with a realtor because they were upside down. In order to be approved for a short sale the owner must qualify by showing hardship and not having the means to cover the deficiencies. "As is" is where the owner is letting you know that they are not going to do any reapirs asked of them but if you use the due diligence clause you have a few days to inspect the property and if you find things wrong with it you can opt out. If there is something majorly wrong with the home than most likely the owner will have it fixed in order for it to pass the buyer's lender inspection.
3 votes Thank Flag Link Fri Mar 7, 2008
"as is" usually means the Seller will make no repairs and/or is making a blanket statement that any problems that come up during an inspection are at the Buyer's risk. "short sale" means the property is selling for less than the Seller's owes. "subject to 3rd party approval" usually means that in addition to the Seller, and Buyer coming to an agreement, there also has to be agreement with another person (usually lien holder such as a mortgage company). My advise to you is to work with a real estate professional experienced in these sort or properties, there is usually a lot of communication that must occur between all parties. And always discuss whatever you are doing with your legal, and financial advisors.
1 vote Thank Flag Link Fri Mar 7, 2008
"As is" refers to the condition of the property being sold. What it means is that the seller does not want to make any repairs that an inspection may find. As a buyer, you are still entitled to have an inspection, and once you review the results, you must accept the condition the home is in, or cancel the contract. As far as a "short sale" and "subject to 3rd party approval" this means that the seller owes more on the mortgage than the asking price and that the final selling price is not determined by the seller, but by the lender. There are many of these in today's market for a variety of reasons. The last few years, a market frenzy brought out a whole new "creative financing boom" where buyers got involved in mortgages they could not otherwise qualify for. When property values declined as they have in this market, and adjustable mortgages adjusted, and insurance and tax bills went up, these homeowners could no longer afford these homes. Throw the sluggish economy into the equation, the high price of gas, and we are overloaded with homes for sale, short sales and foreclosures, and too much inventory for buyers to choose from! It has also caused lenders to tighten their once very loose lending guidelines, making it more difficult to obtain financing, creating another hurdle for buyers wanting to buy, to get financed.
0 votes Thank Flag Link Wed Apr 9, 2008
It means that home is about to be taken back by the bank. Usually if you can stand the long process of buying one of these homes you can get a good deal!
0 votes Thank Flag Link Wed Apr 9, 2008
It means that the seller is unable to make the mortgage payments and has proven that inability to their lender. The lender is allowing the seller to try to sell their home however the lender must approve the terms of the sale. Foreclosure will be the next stop for the seller if the home does not sell. A short sale will look better on the sellers credit record than a foreclosure.
0 votes Thank Flag Link Wed Apr 9, 2008
"Third Party Approval" may also mean that the seller is in some form of Bankruptcy and the court has to approve the terms of sale.
Web Reference: http://AHomeInRichmond.com
0 votes Thank Flag Link Wed Apr 9, 2008
i like kelly's answer, i'd buy a house from her anytime :-)
0 votes Thank Flag Link Sat Apr 5, 2008
As a buyer, it could be a major concern. Basically, the listing agent/seller has to get approval from the seller's mortgage company to accept a lower payoff of the existing mortgage. You could be waiting awhile to hear an answer. I'd want to see something in writing from the mortgage company agreeing to those conditions before I'd do inspections, appraisals..basically spend any money. Many do work out...but cover your bases by seeing documentation that their mortgage company has agreed to those terms before you spend your money.
0 votes Thank Flag Link Tue Mar 11, 2008
Simple answers for you:
"as is" = no repairs will be made to the property
"short sale" = owner is underwater, meaning they are selling for less than owed to the lender.
"subject to 3rd party approval" = The lender(s) must approve

You will see many more of these type of ads, as the housing market declines.
0 votes Thank Flag Link Mon Mar 10, 2008
I have worked with both buyers and sellers for short sales. It is not necessarily a pre-foreclosure situation! I work in a town with a large military population. Unfortunately many of these clients bought their homes during the boom - about 3 years ago. Now it is time for them to move and they do owe more then the house would currently appraise in today's market. They are making their monthly mortgage payments and are not anywhere near a foreclosure situation! It does involve keeping the mortgage company informed of the situation and the process. The seller can give the realtor permission to talk directly with the mortgage company. This keeps the mortgage company in the loop....and greatly decreases the time that the mortgage company takes to provide an approval for the short sale. Believe me...the mortgage companies are swamped with this request and they have "short sale" packages ready to send out to the seller so that the seller can be ready when they get an offer on the house. Just call the mortgage company and ask for the "short sale package". Believe me they are getting these phone calls all day long! Please do not represent to the buyer that the house is about to go into foreclosure unless this is fact. The buyer believes this false information and gives ridiculous offers and wastes everybody's time. The only thing is that the house is not worth what is was when the seller bought it....or the seller refinanced and took out an equity loan during their term of ownership...then the market turned...so they now owe more than it's worth. They are not in foreclosure!
0 votes Thank Flag Link Fri Mar 7, 2008
A "short sale" is a pre-foreclosure situation, whereby the mortgage holder (bank or whoever) has agreed to take less $ than is owed of the loan. The two conventional parties in a sale are obviously the buyer and the seller. Here there is a 3rd part involved. It is the lender. The lender in these cases has to agree on the amount that they will accept in the contract sale price.
I have done a number of these sales and can tell you the facts.
Your agent needs to find the amount the bank will agree to accept. Otherwise you are all wasting your time. Don't think they will take a low-ball offer that is less than this amount.
Time is the other factor. The banks are known for taking their sweet time , and once they accept your contract, they will want to close quickly. It's all on their terms & nothing can be done except get mad.
--therefore have your ducks in a row---and prepare for this turn of event.........let me know how I can help you......Warren Petracek GRI,SRES (720)291-5410
0 votes Thank Flag Link Fri Mar 7, 2008
It means a FAKE LISTING.
Run.
Only 1 in 20 close. I wrote a long detailed blog on what a short sale is and why they are fake.
0 votes Thank Flag Link Fri Mar 7, 2008
"as is" refers to a property where the seller will not fix anything in the property. You are buying the property as you see it. This is most common with a foreclosed property; as a bank will not fix anything or make any sort of repairs. Typically you are allowed an inspection - however afterwards you either accept the property or void the purchase offer.

A "short sale" is "subject to a 3rd party approval" aka Bank/Lender/ or service company working for such. A short sale is when a seller attempts to sell their home for less than they owe to the bank. The bank must agree to an offers because along with the sale is a loss for the bank. These are the most difficult transactions.
0 votes Thank Flag Link Fri Mar 7, 2008
For an explanation, follow the link below...
0 votes Thank Flag Link Fri Mar 7, 2008
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